Energy Dept. sees drop in heating bills

CBS.MarketWatch.com

WASHINGTON (CBS.MW) -- Home-heating bills will be down substantially this winter compared to a year ago, according to a monthly report released by the Energy Department on Thursday.

The agency sees a 35 percent reduction in average natural gas heating bills, a 29 percent decline in heating costs for households that use heating oil and a 12 percent fall in average bills for electricity-heated homes during the six-month period that ends in March 2002 compared to a year earlier.

The expected decline is due to the expected warm temperatures and weak energy prices for this heating season, the Energy Department said, noting that natural gas demand will likely decline by 5 percent this heating season compared to a growth of 6.7 percent last winter.

As oil producers have "jockeyed over the issue of production cutback, world oil prices have languished below the stated range preferred by OPEC ($22 to $28 a barrel)," the agency said. See short-term energy outlook.

While world market conditions have resulted in increasing inventories in the industrialized markets, the Energy Department expects some recovery in prices by next spring. But unless world demand growth recovers more quickly than it has reason to expect, "prices that are comfortably within the OPEC band may be hard to come by over the next year."

The Energy Department also provided a look into the recent movement of gasoline prices, which have fallen 11 weeks in a row since Sept. 17 to $1.11 a gallon -- the lowest weekly price since June 1999.

"With the exception of the period from late 1998 through early 1999, current prices are the lowest in over 20 years when adjusted for inflation," the agency said, citing falling crude prices.

But prices will likely bottom out this month or next and "we can look forward to pump prices gaining about 20 cents per gallon by late spring," on a rise in gasoline demand and a seasonal transition to reformulated gasoline, the Energy Department said.

Calpine pact ensures payment from PG&E

Calpine reached an agreement on a payment plan Thursday to ensure that Pacific Gas & Electric pays back the more than $265 million it owes for power deliveries by November of 2002.

Under the pact, Pacific Gas & Electric, the bankrupt unit of PG&E Corp.
PCG, -0.83%
agreed to pay all of its outstanding debts owed to Calpine's
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small, independent generators, known as qualifying facilities. Shares of Calpine rose 32 cents to close at $20.49.

The San Francisco-based PG&E unit owes Calpine about $265 million, plus interest, for power deliveries made to Pacific Gas & Electric from Dec. 1, 2000, through April 6, 2001, the date of the utility's bankruptcy declaration.

Houston Exploration gives '02 outlook

Houston Exploration expects 2002 earnings per share in the range of $2.20 to $2.40, assuming a natural gas price for the year of $2.90 per million British thermal units, the oil and gas company said Thursday.

On average, analysts polled by Thomson Financial/First Call predicted a profit of $2.51 a share of the 2002.

The company
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also estimated its 2002 capital program at $270 million, including planned drilling and development of the additional South Texas property acquired from Conoco
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Shares fell by 30 cents to $29.95.

KeySpan sees strong growth in FY02

KeySpan Corp. said it expects continued strong earnings growth in 2002 due to "solid" contributions from its core businesses.

The New York firm
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forecast a profit of $2.70 to $2.85 per share for 2002. Analysts polled by Thomson Financial/First Call are currently looking for earnings of $2.82 per share in 2002. KeySpan also reaffirmed expectations for a profit of $2.50 to $2.60 per share in 2001.

The company said growth has been driven by strength in its gas distribution business, which saw a large number of gas to oil conversions in New York, Long Island, and New England. KeySpan's electric services business, and energy services business are also doing well, the company said. Shares fell 70 cents to $32.69.

Enron shares reverse course

Shares of Enron Corp. spiraled downward Thursday after a three-session run up, as investors bet that the bankrupt energy merchant will somehow be able to reorganize.

"The movement in the stock is pretty speculative at this point," said Jeff Dietert, energy analyst at Simmons & Co. in Houston. "You're talking about $20 billion-plus worth of debt and asset values that aren't clearly defined. We are concerned that in a liquidation scenario, there isn't likely to be a lot of value left in the stock."

Enron case shakes faith in auditors

The sudden collapse of Enron and other widely publicized financial restatements has shaken the investing public's faith in the accounting industry, the Securities and Exchange Commission's chief accountant said Thursday.

Judge to hear Enron case Friday

Oil index pulls back as prices slip

A key index of major oil-service shares pulled back Thursday, pressured by rising U.S. supplies and some expectations that Russia's cut in exports, not production, could result in a glut of supplies in storage. Crude futures prices fell to their lowest level in nearly two weeks.

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